Don't Misuse TARP Funds
Just a quick comment on President Obama's plan to use surplus TARP money to fund various job creation measures. I think it's a bad idea. First, TARP funds were appropriated for one purpose and I think it's a bad idea to use them as some sort of slush fund even if the goal is worthwhile. Second, as I explained in my last Forbes column, I think there is enough stimulus in the pipeline and we should let it work before trying to pump more money into the economy. Third, I think it is better to use TRAP funds for deficit reduction; failure to do so will call into question the administration's commitment to allowing stimulus spending to expire on schedule. Finally, if Congress believes that targeted jobs programs are still justified, they should be funded through the appropriations process.
Finally, if Congress believes
Finally, if Congress believes that targeted jobs programs are still justified, they should be funded through the appropriations process.
And 50-55 Senators would be perfectly willing to work through the appropriations process.
What about the Impact of State and Local Government Budget Cuts?
Robert Reich makes the claim today that the estimated $350 billion in State and Local Government budget cuts next year will more than cancel out any positive impact from the remaining Stimulus funds.
"States and cities, for example, are estimated to be $350 billion hole this year and next. They can't run deficits so they're wildly cutting spending, cutting jobs, cutting contracts, and raising taxes and fees. That's a huge anti-stimulus package roughly as big as the remaining direct spending in the old federal stimulus package. Which means, Obama's "new" stimulus, announced today, is about all we have, and it's not nearly enough."
Please respond.
Reich
He has a point and I am not necessarily opposed to doing something in this area. What I am opposed to is treating TARP funds like "found money" that has to be spent ASAP before it burns a hole in our collective pocket. I think we can afford to wait until the budget comes out to decide how best to use these funds or apply them to deficit reduction.
Is your objection to using
Is your objection to using TARP funds rather than appropriations procedural? Otherwise, it doesn't seem to make much sense to me.
Option A: Appropriate $200 billion for stimulus, increasing the deficit by $200b
Option B: Use $200 billion of leftover TARP funds for stimulus, increasing the deficit by $200b.
(Option C: Do nothing)
Both A and B have the same economic impacts, so there's no reason to favor one or the other on economic grounds. Of course, you could argue for C, but I'm wondering why A would be preferred over B, especially since appropriations would be a much slower process (when time is of the essence when it comes to stimulus).